TMI Blog2009 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing of inaccurate particulars of income merely because the claim of the assessee regarding business loss has been accepted by the AO as speculative loss. Regarding the second aspect, i.e., Penalty on addition u/s 68 - loan received by the assessee from M/s. Elite Management Pvt. Ltd - For this loan, the assessee has furnished the loan confirmation from the party - HELD THAT:- In view of this fact that the party has accepted that the cheque in question was given by them to the assessee although not as a loan, we are of the considered opinion that although the addition has been confirmed by the Tribunal on this account but it cannot be said that the explanation of the assessee was not bona fide and it also cannot be said that all the facts relating to the same and material to the computation of total income have not been disclosed by the assessee and hence Explanation 1 to section 271(1)(c) is not applicable in the present case for this addition and hence penalty cannot be imposed on this account also. Addition u/s 68 - claim of the assessee, four cheques were received by the assessee from M/s. Sujata Securities Pvt. Ltd. - assessee has given loan confirmation - HELD T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to appreciate that (a) The appellant received a loan of ₹ 4,00,000 from M/s. Elite Stock Management Pvt. Ltd. through an account payee cheque which was genuine and fully explained. (b) The appellant received a loan of ₹ 19,00,000 from M/s. Sujata Securities Pvt. Ltd. through an account payee cheque which was genuine and fully explained. (c) The appellant has proved the genuineness of the loans of ₹ 4,00,000 and ₹ 19,00,000 through statements and confirmations of the creditors. (d) The loss of ₹ 50,95,247 has been arbitrarily treated as `speculative loss'. The various reasons given by the learned Commissioner of Income-tax (Appeals) to disallow the abovementioned expenses are misconceived and incorrect. The penalty order is contrary to the facts and law of the case. The appellant craves leave to add, amend or alter any of the foregoing grounds of appeal at the time of hearing. Briefly stated, the facts are that the return of income was filed by the assessee showing a loss of ₹ 50,95,247. While completing the assessment under section 143(3) of the Act, on March 26, 1997, the Assessing Officer say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the learned Commissioner of Income-tax (Appeals) for deletion of penalty but without success and now the assessee is in further appeal before us. It is submitted by the learned authorised representative for the assessee that regarding the first issue as per which the Assessing Officer has considered the claim of the assessee of business loss of ₹ 50,95,247 as speculative loss, it. was submitted that for the same, no penalty under section 271(1)(c) can be imposed and in support of this contention, reliance was placed on the judgment of the hon'ble Delhi High Court, rendered in the case of CIT v. Auric Investments and Securities Ltd. as reported in [2009] 310 ITR 121. Regarding the other two additions of ₹ 4 lakhs and ₹ 19 lakhs under section 68, it is submitted that although the addition has been confirmed by the Tribunal, penalty under section 271(1)(c) cannot be imposed because the assessee has furnished explanation which the assessee could not substantiate but such explanation is bona fide and all the facts relating to the same and material to the computation of total income have been disclosed by the assessee and as per Explanation 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the hon'ble Delhi High Court in that case that there is nothing on record to show that in furnishing its return of income, the assessee has either concealed its income or has furnished inaccurate particulars of income. The mere treatment of the business loss as speculative loss by the Assessing Officer does not automatically warrant inference of concealment of income. It was also held that it cannot be said that the assessee has concealed any particulars, so far as its computation of income is concerned and as such, the provisions of section 271(1)(c) of the Act are not attracted. Respectfully following the judgment of the hon'ble Delhi High Court regarding this aspect of the matter, we hold that penalty is not leviable under section 271(1)(c) because it cannot be said that there is concealment of income or furnishing of inaccurate particulars of income merely because the claim of the assessee regarding business loss has been accepted by the Assessing Officer as speculative loss. Regarding the second aspect, i.e., penalty on addition of ₹ 23 lakhs under section 68 of the Act, we find that out of this, there is one loan of ₹ 4 lakhs stated to be rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is made by the Assessing Officer, it has to be seen that as to whether any explanation has been furnished by the assessee or not. If no explanation have been furnished, it will be deemed that such addition represents the income in respect of which particulars have been concealed. If the explanation has been found by the Assessing Officer or by the Commissioner of Income-tax (Appeals) to be false, then also, the same consequence will follow. Thirdly, if the explanation given by the assessee could not be substantiated by him and if the assessee fails to prove that such explanation is bona fide and all the facts relating to the same and material to the computation of total income have not been disclosed by the assessee then also, it can be deemed that such addition represents the income in respect of which particulars have been concealed but if it is found that the explanation is bona fide and all the facts relating to the same and material to the computation of total income, had been disclosed by the assessee then no such consequence will follow. In the present case, explanation is offered by the assessee and the same was not found to be false by the Assessing Officer or by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c) is not applicable and hence for this loan also, the Assessing Officer is doubting the source of source which cannot be the basis for imposing penalty. Regarding the judgment of the hon'ble apex court rendered in the case of Dharamendra Textile Processors [2008] 306 ITR 277 relied upon by the learned Departmental representative for the Revenue, we find that as per the judgment of the hon'ble apex court, penalty is a civil liability but this does not mean that in all the cases where the addition is made, penalty has to be imposed. In those cases, where it is found that although addition is made but the addition does not amount to concealment of income or furnishing of inaccurate particulars of income, penalty under section 271(1)(c) is not imposable. We find that this aspect of the matter was considered by the Tribunal in the case of Gem Granites (Karnataka) v. Deputy CIT [2009] 120 TTJ (Chennai) 992. In this case also, the issue was regarding imposition of penalty under section 271(1)(c) and after considering the judgment of the hon'ble apex court rendered in the case of Dharamendra Textile Processors [2008] 306 ITR 277, it was held by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, we are of the view that the possibility of a wrong entry cannot be ruled out in the present case. Therefore, we hold that the Department has failed to prove the concealment on the part of the assessee without any iota of doubt. As per the latest judgment of the Supreme Court, though the liability may be a civil liability, but cannot be equated with other liability of the payment of tax in the Act. Therefore, for attracting the penalty provision, a strict proof is required and onus to prove the same is on the Department. Since the Department has failed to establish the same and discharge its onus, ultimately, we find that the penalty imposed by the Department is not warranted and justified in the facts and circumstances of the case. Accordingly, we delete the penalty. Since, we have noted above that in the present case, Explanation 1 to section 271(1)(c) is not applicable because bona fide explanation has been furnished by the assessee and hence we feel that penalty in the present case is not justified as per the above discussion and hence respectfully following this Tribunal's decision with regard to applicability of the judgment of the hon'ble apex court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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